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Client Alert: Stipulated Judgment For Full Amount Of Underlying Claim As Security For Compromise Settlement Void As Unenforceable Penalty

March 26, 2014 — David W. Evans, Krsto Mijanovic, and Gregory M. Smith-Haight Brown & Bonesteel LLP
In Purcell v. Schweitzer (No. D063435 - filed February 24, 2014, certified for publication March 17, 2014), the Fourth District Court of Appeal upheld an order setting aside a stipulated default judgment for the full amount of plaintiff’s claim which had been agreed to by the parties to a settlement agreement, finding that it constituted an unenforceable penalty because the amount bore no reasonable relationship to the settling party’s actual damages resulting from a breach of the settlement agreement. In an agreement settling a breach of contract action seeking $85,000 in damages based on an unpaid debt, the plaintiff agreed to settle the claim and to accept $38,000 in 24 monthly installments, including interest on the unpaid principal at 8.5 percent. The agreement provided that payments were due on the first day of each month and to be considered “timely,” had to be received by the fifth day of each month. If any payment was not made on time, it was to be considered a breach of the entire settlement agreement, making the entire $85,000 original liability due pursuant to a stipulation for entry of judgment for such amount. The stipulation included language to the effect that the $85,000 figure accounted for the “economics” of further proceedings. The agreement also specified that the foregoing provision did not constitute an unlawful “penalty” or “forfeiture” and that defendant waived any right to an appeal and any right to contest or seek to set aside such a judgment. Reprinted courtesy of Haight Brown & Bonesteel LLP attorneys David W. Evans, Krsto Mijanovic, and Gregory M. Smith Mr. Evans may be contacted at devans@hbblaw.com; Mr. Mijanovic may be contacted at kmijanovic@hbblaw.com, and Mr. Smith may be contacted at gsmith@hbblaw.com Read the court decision
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Washington, DC’s COVID-19 Eviction Moratorium Expires

August 23, 2021 — Zachary Kessler, Amanda G. Halter & Adam Weaver - Gravel2Gavel Construction & Real Estate Law Blog
Throughout the COVID-19 pandemic, federal and local governments have adopted varying moratoria on evictions, enacted as emergency legislative protections for tenants facing eviction. The federal moratorium on eviction, promulgated by the Centers for Disease Control and Prevention (CDC), is set to expire on July 31. While the Supreme Court recently left the moratorium in place, the Court signaled that it would likely be held unconstitutional if extended and challenged again. With the sole federal moratorium expiring, state and local protections may remain in effect; however, many of these local orders are also beginning to expire. Washington, DC’s eviction moratorium, one of the most tenant-friendly pieces of emergency legislation in the country, is one such example, beginning a phaseout process that allows the pace of evictions to slowly begin throughout 2021 before a final legislative sunset in February 2022. In response to the COVID-19 pandemic, the Council of the District of Columbia and Mayor Muriel Bowser enacted a series of public health emergency legislation. Under the Coronavirus Omnibus Emergency Amendment Act of 2020, the Council put a pause on evictions for nonpayment of rent or violations of lease provisions, prohibiting landlords from filing a complaint to evict a tenant who detained “possession of real property without right” or whose “right to possession has ceased.” Under the moratorium, the Council effectively banned residential evictions, unless a court found that a tenant had performed an “illegal act” within the rental unit, that the tenant was causing undue hardship on the health, welfare, and safety of other tenants or neighbors, or that the tenant had abandoned the premises. The moratorium and other tenant-protections were initially set to remain in place indefinitely, expiring 60 days after the end of Mayor Bowser’s declared COVID-19 emergency period. Reprinted courtesy of Zachary Kessler, Pillsbury, Amanda G. Halter, Pillsbury and Adam Weaver, Pillsbury Mr. Kessler may be contacted at zachary.kessler@pillsburylaw.com Ms. Halter may be contacted at amanda.halter@pillsburylaw.com Mr. Weaver may be contacted at adam.weaver@pillsburylaw.com Read the court decision
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Coverage Denied Where Occurrence Takes Place Outside Coverage Territory

December 11, 2018 — Tred R. Eyerly - Insurance Law Hawaii
The court held there was no coverage for construction defect claims that occurred outside the coverage territory. Foremost Signature Ins. Co. v. Silverboys, 2018 U.S. Dist. LEXIS 154524 (S.D. Fla. Sept. 11, 2018). Solo Design, LLC, a Miami-based design company, entered into a contract with Silverboys, LLC (Owner) to provide interior design services in conjunction with the renovation of the Owner's vacation home in the Bahamas. Solo retained Whittingham, a Bahamian architect, as a subcontractor to serve as project manager. Owner sued Solo, Whittingham and others in Florida for breach of contract, fraud, conversion and negligence when the project did not go as planned. The underlying complaint alleged intentional misconduct, lying about qualifications and the progress of the project, submitting false invoices, requesting money for services that were not performed, etc. Owner alleged that the damages included: (a) the cost to repair substandard work; (b) loss of use of the home due to delay; and (c) overcharges for furnishings, contract fees, and expenses. The underlying complaint set forth only a few instances of physical injury to the home, including mold on the ceiling in the master shower, faulty millwork on the children's playroom bookshelf, and a defective front door and resysta facade. Read the court decision
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Reprinted courtesy of Tred R. Eyerly, Damon Key Leong Kupchak Hastert
Mr. Eyerly may be contacted at te@hawaiilawyer.com

How Many Bridges Does the Chesapeake Bay Need?

August 03, 2022 — Ethan McLeod - Bloomberg
Steve Kline, a 7th-generation Marylander, knows well the vacation tradition of driving across the twin spans of the Chesapeake Bay Bridge for trips to the beach resort of Ocean City. His grandfather, an ironworker, helped build the bridge’s first span, which opened in 1952. He’s also very familiar with another seasonal rite: wading through the infamous miles-long traffic backups that last from Memorial Day through the end of summer. But Kline, president of the nonprofit Eastern Shore Land Conservancy, is not on board with the state’s proposed multibillion-dollar fix — a new 4.3-mile-long crossing, to be built alongside the two current spans of the Bay Bridge. In April, the Maryland Transportation Authority (MDTA) announced it had received federal approval to use this route for a potential new, wider bridge that would be likely to eventually replace its older siblings, addressing the notorious summer bottlenecks for decades to come. And on June 10, at a press conference held near the bridge’s eastbound ramp, Maryland Governor Larry Hogan announced that he would commit $28 million in bridge toll revenue to fund the second phase of an environmental impact study on the idea. Read the court decision
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Reprinted courtesy of Ethan McLeod, Bloomberg

Condo Owners Suing Bank for Failing to Disclose Defects

January 17, 2014 — Beverley BevenFlorez-CDJ STAFF
The Option Owners Association Inc., Condo Owners in Lincoln, Nebraska, filed suit against Security First Bank, “alleging the bank failed to disclose ‘hidden defects,’” reported the Lincoln Journal Star. Alleged defects include defective siding, improperly installed siding, and defective flashing. The condo owners are seeking at least $644,000 which they claim is the “fair market value of the repairs needed to fix the alleged construction defects.” When the Lincoln Journal Star asked Jim Wefso, general counsel for Security First Bank, to comment, he stated, “The bank doesn't feel it has any liability in the case.” Read the court decision
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Building 47 Bridges in Two Years

December 23, 2023 — Dan Sopczak - Construction Executive
Every construction project has its challenges, but some truly push the boundaries of what is achievable in the heavy civil industry. When the Indiana Department of Transportation sought to modernize its I-65/I-70 North Split Interchange in Indianapolis, Indiana, its request for proposals included building 47 new bridges and rehabilitating six additional bridges on an ambitious two-year timeline—905 days to substantial completion. “Three design-build teams responded to the RFQ, and the same three teams responded to the RFP,” according to INDOT Strategic Communications Director Natalie Garrett. “Proposals were scored and evaluated using the best-value evaluation process defined by INDOT. The score was a combination of a technical proposal score and a price score.” Reprinted courtesy of Dan Sopczak, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved. Read the court decision
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You're Doing Construction in Russia, Now What?

May 16, 2022 — Anazette Ray & Michael Vardaro - Zetlin & De Chiara LLP
In recent weeks, there has been a long list of companies, from all industries spanning from construction/engineering to fashion and hospitality, that have announced that they are completely severing ties with Russia, while a host of others have announced a temporary halt. See Jeffrey A. Sonnenfeld, Over 400 Companies Have Withdrawn from Russia – But Some Remain, Yale School of Management (Updated Mar. 21, 2022), https://som.yale.edu/story/2022/over-400-companies-have-withdrawn-russia-some-remain?utm_campaign=mb. For those developers, EPC contractors, and design professionals (engineers and architects) who have construction projects in Russia, the question is, “How should we proceed?” The U.S. initially stated that it was not issuing a total embargo on business dealings and trade relations with Russia in response to the nation’s invasion of Ukraine. Instead, the U.S., along with many other Western nations, issued targeted sanctions. See Francesco Giumelli, Understanding Targeted U.N. Sanctions: An Empirical Analysis, International Affairs, 91(6), 1351-1368 (explaining the difference between embargoes and targeted sanctions). However, after evidence of war crimes by Russia emerged, President Biden issued an Executive Order prohibiting U.S. individuals, whether in the states or abroad, from new investments in Russia and prohibiting U.S. individuals from transactions with Russian state-owned entities. See April 6, 2022, Presidential Actions, https://www.whitehouse.gov/briefing-room/presidential-actions/2022/04/06/prohibiting-new-investment-in-and-certain-services-to-the-russian-federation-in-response-to-continued-russian-federation-aggression/. This new Executive Order is said to not affect existing contracts in Russia, but instead prohibits new ones. Reprinted courtesy of Anazette Ray, Zetlin & De Chiara LLP and Michael Vardaro, Zetlin & De Chiara LLP Ms. Ray may be contacted at aray@zdlaw.com Mr. Vardaro may be contacted at mvardaro@zdlaw.com Read the court decision
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Florida’s New Civil Remedies Act – Bulletpoints As to How It Impacts Construction

April 10, 2023 — David Adelstein - Florida Construction Legal Updates
There has been much talk about Florida’s new Civil Remedies Act (House Bill 837) that Governor DeSantis approved on March 24, 2023. As it pertains to construction, here is how I see it with key bulletpoints on the impact this new Act has on the construction industry:

New Florida Statute s. 86.121 – This is an attorney’s fees statute for declaratory relief actions to the prevailing insured to determine insurance coverage after TOTAL COVERAGE DENIAL. (Note: A defense offered pursuant to a reservation of rights is not a total coverage denial.) This right only belongs to the insured and cannot be transferred or assigned. And the parties are entitled to the summary procedure set forth in Florida Statute s. 51.011 requiring the court to advance the cause on the calendar. The new statute does say it does NOT apply to any action arising under a residential or commercial property insurance policy. (Thus, since builder’s risk coverage is a form of property insurance, the strong presumption is this new statute would not apply to it.) Rather, the recent changes to Florida Statute s. 626.9373 would apply which provides, “In any suit arising under a residential or commercial property insurance policy, there is no right to attorney fees under this section.”
Florida Statute s. 95.11 – The statute of limitations for negligence causes of action are two years instead of four years. This applies to “causes of action accruing after the effective date of this act.”

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Reprinted courtesy of David Adelstein, Kirwin Norris, P.A.
Mr. Adelstein may be contacted at dma@kirwinnorris.com

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